Are senior residents not liable to pay advance tax? Solutions to your private finance queries

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Are senior citizens not liable to pay advance tax? Answers to your personal finance queries


Readers can ship in queries on private finance and investing to moneywise@thehindu.co.in

Q. As per Sec. 234B of the I-T Act, senior residents with out skilled revenue will not be liable to pay advance tax. As of now, banks are deducting 10% tax on mounted deposit curiosity earned within the case of senior residents additionally. This tax deduction is tantamount to obligatory deduction of advance tax fee. May you assist make clear this?

A. As per Part 208 of the I-T Act, each individual whose estimated tax legal responsibility for the yr is ₹10,000 or extra, tax within the type of ‘advance tax’ is liable to be remitted to the federal government as per the due dates and the corresponding proportion of tax that’s to be remitted.

A resident senior citizen shouldn’t be liable to pay advance tax if he doesn’t have revenue from enterprise or career. Sections 234B and 234C present for the curiosity as a result of authorities in case the tax shouldn’t be remitted in accordance with part 208 through the evaluation yr.

Part 194A of the Act offers with TDS with respect to funds made within the type of curiosity from aside from securities. That is primarily the curiosity obtained from banks from mounted deposits, amongst others. Banks and co-operative societies are required to deduct tax at 10% if the combination curiosity payouts in a yr exceeds ₹40,000 (₹50,000 for senior residents).

In case of senior residents to whom tax is being deducted within the type of Part 194A, they might submit a declaration by Type 15H to their respective banks the place deposits are held every year whereby their revenue for that individual yr is lower than the essential exemption restrict thus avoiding TDS for the yr and eradicating difficulties by creating extra monies within the fingers of such people.

The spirit of exempting senior residents from paying advance tax is to alleviate senior residents from the duty of figuring out the taxes primarily based on the provisions of the act on their very own and remitting taxes on due dates. Solely senior residents finishing up enterprise or career will not be relieved as it’s believed by the lawmakers that such individuals make use of numerous assets within the type of employees, advisers, consultants, amongst others.

The inclusion of TDS provisions for various- natured inward remittances from remitters, even for senior residents, is to realize the twin objective of making liquidity within the fingers of the federal government for efficiency of its sovereign duties and on the identical time, relieving the hardships from senior residents of performing the duty of figuring out the taxes and remitting the identical.

Advance tax and TDS provisions are complementary and don’t undermine one another’s objective.

Q. I’m a authorities worker. I’ve invested ₹80,000 in NPS tier I account by way of wage deduction. My complete Part 80C financial savings is about ₹2 lakh. Can I declare the rebate of ₹2 lakh by bifurcating the quantity into ₹1.50 lakh for 80C and ₹50,000 for 80CCD1B? Or, will I’ve to take a position ₹50,000 extra to say rebate below 80CCD 1B?

A. Quantities contributed by your employer in direction of NPS is roofed below 80CCD(1) and 80CCD(2) in direction of worker and employer contributions respectively by wage disbursement.

Any voluntary contribution in direction of NPS shall solely be coated below 80CCD(1B), thus the extra ₹50,000 profit prescribed can’t be claimed by you below 80CCD(1B) as no voluntary contribution has been achieved by you.

Part 80CCD(1) is roofed below the restrict of 80CCE of ₹1.50 lakh and as talked about by you, it’s exhausted. With respect to 80CCD(2), you might declare a most deduction of 14% of primary plus DA (for central authorities employees) or 10% of primary plus DA (for non-central authorities employees) and the identical is exterior the purview of ₹1.50 lakh (80CCE) and ₹50,000 (80CCD(1B)).

Kindly contact your human assets division to determine the break-up of contributions in direction of NPS below 80CCD(1) and 80CCD(2). If felt crucial, a further quantity will be invested voluntarily below 80CCD(1B) to say deduction of as much as ₹50,000.

(The writer is a companion, GSS & Associates, Chartered Accountants, Chennai)



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